How It Works
ALEX enables users to lend and borrow digital currencies through the pooling of funds. Borrowers submit collateral and can borrow up to the maximum Loan-to-Value (LTV) ratio. The interest for borrowing the tokens is paid upfront by the borrower upon executing the smart contract.
Lenders receive yTokens (yield tokens), which represent the principal and the interest accrued.
yTokens provide a fixed-income interest rate. Lenders are guaranteed to receive the interest accrued at the maturity date through the redemption of yTokens via smart contract.
Each loan is secured by the collateral of the borrower which provides risk mitigation against default.
When the borrowing period concludes, borrowers may either “rollover” to extend maturity, or claim their collateral where:
Claim Value = Borrow Collateral Value - Borrowed Value.